Summary
The Bank of England has moved its digital pound exploration into Phase 2, testing how public stablecoins and central bank money can operate together in a single payment flow for trade finance. Working with NOBO Finance, Dun & Bradstreet and Polygon Labs in its Digital Pound Lab, the BOE will explore creating reusable credit profiles for small enterprises and using stablecoins alongside a potential digital pound for invoice factoring. The experiments, which do not involve real customers or money, are intended to inform the BOE and the Treasury's assessment of how different forms of digital money can interoperate.
Key Facts
- BOE digital pound project entered Phase 2, testing stablecoins and central bank money in a single payment flow
- Participants: NOBO Finance, Dun & Bradstreet, Polygon Labs
- First workstream builds an SME "bankable profile" — combining wallet transaction data, open-finance information and business intelligence into a reusable credit assessment
- Polygon provides smart contracts to record verified outcomes and manage consent
- Second workstream experiments with invoice factoring backed by electronic bills of lading
- Exporter receives an advance through stablecoin technology; UK importer settles in digital pounds
- Polygon provides stablecoin settlement infrastructure via its Open Money Stack (fiat-to-stablecoin conversion, wallets, smart contracts)
- Lab uses no real customers or money; does not signal a decision to issue a digital pound
- Findings feed into BOE and Treasury's joint assessment ahead of next steps later this year
- Polygon CEO Marc Boiron: "For digital money to actually move the world's trade, its different forms have to work together"
Why It Matters
The BOE's Phase 2 experiment addresses a central question facing central banks globally: whether different forms of digital money — public and private, central bank money and stablecoins — can interoperate rather than forcing companies and customers onto a single payment infrastructure. The focus on cross-border SME trade finance is significant because trade-finance delays make it harder for small businesses to prove creditworthiness and access funding; the gap between shipping goods and receiving payment is frozen capital. By testing a portable credit identity alongside stablecoin and digital pound settlement, the BOE is exploring how digital money could unlock working capital for SMEs and modernize international trade. The experiment signals that central banks are increasingly treating stablecoins as complementary to CBDCs rather than competitors, shaping the future architecture of cross-border payments.